AGENCY AGREEMENT
THIS AGREEMENT made the ______ day of ____________, 1999, by and
between PILGRIM MUTUAL FUNDS, a Delaware trust, currently consisting of twelve
(12) series styled PILGRIM INTERNATIONAL CORE GROWTH, PILGRIM WORLDWIDE GROWTH,
PILGRIM INTERNATIONAL SMALL CAP GROWTH, PILGRIM EMERGING COUNTRIES, PILGRIM
LARGE CAP GROWTH, PILGRIM MIDCAP GROWTH, PILGRIM SMALL CAP GROWTH, PILGRIM
CONVERTIBLE, PILGRIM BALANCED, PILGRIM STRATEGIC INCOME, PILGRIM HIGH YIELD FUND
II and PILGRIM MONEY MARKET, a registered investment company, and any other
registered investment companies established as a series of the aforementioned
investment company and set forth on Exhibit A, attached hereto, as amended from
time to time (each such registered investment company hereinafter jointly and
severally referred to as "Fund") having its principal place of business at Two
Renaissance Square, 00 Xxxxx Xxxxxxx Xxxxxx., Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000
and DST SYSTEMS, INC., a corporation organized and existing under the laws of
the State of Delaware, having its principal place of business at 000 Xxxx 00xx
Xxxxxx, 0xx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 ("DST"):
WITNESSETH:
WHEREAS, Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. DOCUMENTS TO BE FILED WITH APPOINTMENT.
In connection with the appointment of DST as Transfer Agent and Dividend
Disbursing Agent for Fund, there will be filed with DST the following
documents:
A. A certified copy of the resolutions of the Board of Directors or
Trustees of Fund appointing DST as Transfer Agent and Dividend
Disbursing Agent, approving the form of this Agreement, and designating
certain persons to sign stock certificates, if any, and give written
instructions and requests on behalf of Fund;
B. A certified copy of the Articles of Incorporation or Declaration of
Trust of Fund and all amendments thereto;
C. A certified copy of the Bylaws of Fund;
D. Copies of Registration Statements and amendments thereto, filed with the
Securities and Exchange Commission.
E. Specimens of all forms of outstanding stock certificates, in the forms
approved by the Board of Directors or Trustees of Fund, with a
certificate of the Secretary of Fund, as to such approval;
F. Specimens of the signatures of the officers of Fund authorized to sign
stock certificates and individuals authorized to sign written
instructions and requests;
G. An opinion of counsel for Fund with respect to:
(1) Fund's organization and existence under the laws of its state of
organization,
(2) The status of all shares of stock of Fund covered by the appointment
under the Securities Act of 1933, as amended, and any other
applicable federal or state statute, and
(3) That all issued shares are, and all unissued shares will be, when
issued, validly issued, fully paid and nonassessable.
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2. CERTAIN REPRESENTATIONS AND WARRANTIES OF DST.
DST represents and warrants to Fund that:
A. It is a corporation duly organized and existing and in good standing
under the laws of Delaware.
B. It is duly qualified to carry on its business in the State of Missouri.
C. It is empowered under applicable laws and by its Articles of
Incorporation and bylaws to enter into and perform the services
contemplated in this Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3. CERTAIN REPRESENTATIONS AND WARRANTIES OF FUND.
Fund represents and warrants to DST that:
A. It is duly organized as heretofore described and existing and in good
standing under the laws of the State/Commonwealth of organization.
B. It is an open-end or closed-end management investment company registered
under the Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of 1933 has been filed
and will be effective with respect to all shares of Fund being offered
for sale.
D. All requisite steps have been and will continue to be taken to register
Fund's shares for sale in all applicable states and such registration
will be effective at all times shares are offered for sale in such
state.
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E. Fund is empowered under applicable laws and by its charter or
declaration and bylaws to enter into and perform this Agreement.
4. SCOPE OF APPOINTMENT.
A. Subject to the conditions set forth in this Agreement, Fund hereby
appoints DST as Transfer Agent and Dividend Disbursing Agent.
B. DST hereby accepts such appointment and agrees that it will act as
Fund's Transfer Agent and Dividend Disbursing Agent. DST agrees that it
will also act as agent in connection with Fund's periodic withdrawal
payment accounts and other open accounts or similar plans for
shareholders, if any.
C. Fund agrees to use its best efforts to deliver to DST in Kansas City,
Missouri, as soon as they are available, all of its shareholder account
records.
D. DST, utilizing DST's computerized data processing systems for
securityholder accounting (the "TA2000 System" for open-end funds and
"STS System" for closed-end funds and the "Systems" for both the
TA2000(R)and STS Systems, jointly and severally), and subject to the
provisions of Sections 19, 20 and 21 of this Agreement, will perform the
following services as transfer, dividend disbursing and shareholders'
servicing agent for Fund, and as agent of Fund for shareholder accounts
thereof, in a timely manner: issuing (including countersigning),
transferring and canceling share certificates; maintaining all
shareholder accounts; providing transaction journals; preparing
shareholder meeting lists (one annually at no charge, lists for
additional meetings will be charged for), mailing proxies and proxy
materials, receiving and tabulating proxies, certifying the shareholder
votes in Fund (all proxy activities are subject to proxy fees and
reimbursable fees); mailing shareholder reports and prospectuses
supplied to DST by Fund or its agents; withholding, as required by
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Federal law and as directed by Fund, taxes on nonresident alien and
foreign corporation accounts, for pension and deferred income, backup
withholding or other instances agreed upon by Fund and DST, disbursing
income dividends and capital gains distributions to shareholders,
preparing, filing and mailing U.S. Treasury Department Forms 1099, 1042,
1042S and backup withholding as required for all shareholders and as
directed by Fund; preparing and mailing confirmation forms to
shareholders and dealers, as instructed, for all purchases and
liquidations (not applicable to closed-end funds except for transfers
into or out of a shareholders' account) of shares of Fund and other
confirmable transactions in shareholders' accounts; recording
reinvestment of dividends and distributions in shares of Fund; providing
or making available on-line daily and monthly reports as provided by
either of the Systems and as requested by Fund or its management
company; maintaining those records necessary to carry out DST's duties
hereunder, including all information reasonably required by Fund to
account for all transactions (non-valued in closed-end funds) in Fund
shares, calculating the appropriate sales charge with respect to each
purchase of Fund shares as set forth in the prospectus for Fund (not
applicable to closed-end funds); solely for open-end funds: determining
the portion of each sales charge payable to the dealer participating in
a sale in accordance with schedules delivered to DST by Fund's principal
underwriter or distributor (hereinafter "principal underwriter") from
time to time, disbursing dealer commissions collected to such dealers,
determining the portion of each sales charge payable to such principal
underwriter and disbursing such commissions to the principal
underwriter; receiving correspondence pertaining to any former, existing
or new shareholder account, processing such correspondence for proper
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recordkeeping, and responding promptly to shareholder correspondence;
mailing to dealers confirmations of wire order trades (not applicable to
closed-end funds); mailing copies of shareholder statements to
shareholders and registered representatives of dealers in accordance
with Fund's instructions; and, solely in the case of open-end funds,
processing, generally on the date of receipt, purchases or redemptions
or instructions to settle any mail or wire order purchase or redemption
(or in the case of closed-end funds, effecting transfer of certificates)
received in proper order as set forth in the prospectus and DST's
Procedures, as hereinafter defined, rejecting promptly any requests not
received in proper order (as defined by Fund or its agents or DST's
Procedures), and, solely in the case of open-end funds, causing
exchanges of shares to be executed in accordance with Fund's
instructions, the applicable prospectus, DST's Procedures and the
general exchange privilege application.
E. At the request of an Authorized Person, DST shall use reasonable efforts
to provide the services set forth in this Agreement in connection with
transactions (i) on behalf of retirement plans and participants in
retirement plans and transactions ordered by brokers as part of a "no
transaction fee" program ("NTF"), the processing of which transactions
require DST to use methods and procedures other than those usually
employed by DST to perform shareholder servicing agent services, (ii)
involving the provision of information to DST after the commencement of
the nightly processing cycle of whichever of the Systems is applicable
or (iii) which require more manual intervention by DST, either in the
entry of data or in the modification or amendment of reports generated
by the Systems than is usually required by non-retirement plan, non-NTF
and pre-nightly transactions (the "Exception Services").
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F. Fund shall have the right to add new series to the Systems upon at least
thirty (30) days' prior written notice to DST provided that the
requirements of the new series are generally consistent with services
then being provided by DST under this Agreement. Rates or charges for
additional series shall be as set forth in Exhibit B, as hereinafter
defined, for the remainder of the contract term except as such series
use functions, features or characteristics for which DST has imposed an
additional charge as part of its standard pricing schedule. In the
latter event, rates and charges shall be in accordance with DST's
then-standard pricing schedule.
G. DST shall use reasonable efforts to provide, reasonably promptly under
the circumstances, the same services with respect to any new, additional
functions or features or any changes or improvements to existing
functions or features as provided for in Fund's instructions, prospectus
or application as amended from time to time, for Fund provided (i) DST
is advised in advance by Fund of any changes therein and (ii) the
Systems and the mode of operations utilized by DST as then constituted
support such additional functions and features. If any addition to,
improvement of or change in the features and functions currently
provided by either of the Systems or the operations as requested by Fund
requires an enhancement or modification to either of the Systems or to
operations as presently conducted by DST, DST shall not be liable
therefor until such modification or enhancement is, if DST agrees to
develop or institute it, developed (at Fund's expense) and installed on
the Systems or a new mode of operation is instituted. If any new,
additional function or feature or change or improvement to existing
functions or features or new service or mode of operation measurably
increases DST's cost of performing the services required hereunder at
the current level of service, DST shall advise Fund of the amount of
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such increase and if Fund elects to utilize such function, feature or
service, DST shall be entitled to increase its fees by the amount of the
increase in costs. In no event shall DST be responsible for or liable to
provide any additional function, feature, improvement or change in
method of operation until it has consented thereto in writing.
5. LIMIT OF AUTHORITY.
Unless otherwise expressly limited by the resolution of appointment or by
subsequent action by Fund, the appointment of DST as Transfer Agent will be
construed to cover the full amount of authorized stock of the class or
classes for which DST is appointed as the same will, from time to time, be
constituted, and any subsequent increases in such authorized amount.
In case of such increase Fund will file with DST:
A. If the appointment of DST was theretofore expressly limited, a certified
copy of a resolution of Fund's Board of Directors or Trustees, as
applicable, increasing the authority of DST;
B. A certified copy of the amendment to Fund's Articles of Incorporation or
Declaration of Trust, as applicable, authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance of the
increased stock, and an opinion of counsel that the order or consent of
no other governmental or regulatory authority is required;
D. Opinion of counsel for Fund stating:
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(1) The status of the additional shares of stock of Fund under the
Securities Act of 1933, as amended, and any other applicable federal
or state statute and that said shares may be legally issued; and
(2) That the additional shares are, or when issued will be, validly
issued, fully paid and nonassessable.
6. COMPENSATION AND EXPENSES.
A. In consideration for its services hereunder as Transfer Agent and
Dividend Disbursing Agent, Fund will pay to DST from time to time a
reasonable compensation for all services rendered as Agent, and also all
its reasonable out-of-pocket expenses, charges, counsel fees, and other
disbursements (Compensation and Expenses) incurred in connection with
the agency. Such compensation is set forth in a separate schedule to be
agreed to by Fund and DST, a copy of which is attached hereto and
incorporated herein by reference. If Fund has not paid such Compensation
and Expenses to DST within a reasonable time, DST may charge against any
monies held under this Agreement, the amount of any Compensation and/or
Expenses for which it shall be entitled to reimbursement under this
Agreement.
B. Fund also agrees promptly to reimburse DST for all reasonable
reimbursable expenses or disbursements incurred by DST in connection
with the performance of services under this Agreement including, but not
limited to, expenses for postage, express delivery services, freight
charges, envelopes, checks, drafts, forms (continuous or otherwise),
specially requested reports and statements, telephone calls, telegrams,
stationery supplies, counsel fees, outside printing and mailing firms
(including Output Technologies SRI Group, Inc.), magnetic tapes, reels
or cartridges (if sent to a Fund or to third party at Fund's request)
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and magnetic tape handling charges, off-site record storage, media for
storage of records (e.g., microfilm, microfiche, optical platters,
computer tapes), computer equipment installed at Fund's request at
Fund's or a third party's premises, telecommunications equipment,
telephone/ telecommunication lines between Fund and its agents, on one
hand, and DST on the other, proxy mailing, soliciting, processing and/or
tabulating costs, second-site backup computer facility, transmission of
statement data for remote printing or processing, and NSCC transaction
fees (as well as any other expenses set forth on Exhibit C, as amended
from time to time) to the extent any of the foregoing are paid or
incurred by DST. Fund agrees to pay postage expenses at least one day in
advance if so requested. In addition, any other expenses incurred by DST
at the request or with the consent of Fund will be promptly reimbursed
by Fund.
C. Amounts due hereunder shall be due and paid on or before the thirtieth
(30th) business day after receipt of the statement therefor by Fund (the
"Due Date"). Fund is aware that its failure to pay all amounts in a
timely fashion so that they will be received by DST on or before the Due
Date will give rise to costs to DST not contemplated by this Agreement,
including but not limited to carrying, processing and accounting
charges. Accordingly, subject to Section 6.D. hereof, in the event that
any amounts due hereunder are not received by DST by the Due Date, Fund
shall pay a late charge equal to the rate set forth in the fee schedule
times the amount overdue, times the number of days from the Due Date up
to and including the day on which payment is received by DST divided by
365. The parties hereby agree that such late charge represents a fair
and reasonable computation of the costs incurred by reason of late
payment or payment of amounts not properly due. Acceptance of such late
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charge shall in no event constitute a waiver of Fund's or DST's default
or prevent the non-defaulting party from exercising any other rights and
remedies available to it.
D. In the event that any charges are disputed, Fund shall, on or before the
Due Date, pay all undisputed amounts due hereunder and notify DST in
writing of any disputed charges for out-of-pocket expenses which it is
disputing in good faith. Payment for such disputed charges shall be due
on or before the close of the fifth (5th) business day after the day on
which DST provides to Fund documentation which an objective observer
would agree reasonably supports the disputed charges (the "Revised Due
Date"). Late charges shall not begin to accrue as to charges disputed in
good faith until the first day after the Revised Due Date.
7. OPERATION OF DST SYSTEMS.
In connection with the performance of its services under this Agreement, DST
is responsible for such items as:
A. That entries in DST's records and in Fund's records on the Systems
created by DST accurately reflect the orders, instructions, and other
information received by DST from Fund, Fund's principal manager,
underwriter or distributor or Fund's investment adviser, sponsor,
custodian or administrator (each an "Authorized Person"), broker-dealers
and shareholders;
B. That shareholder lists, shareholder account verifications, confirmations
and other shareholder account information to be produced from its
records or data be available and accurately reflect the data in Fund's
records on the Systems;
C. The accurate and timely issuance of dividend and distribution checks in
accordance with instructions received from Fund and the data in Fund's
records on the Systems;
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D. That redemption transactions and payments with respect to shares of
open-end funds and transfers with respect to closed-end funds be
effected timely, under normal circumstances on the day of receipt, and
accurately in accordance with instructions received by DST from dealers,
shareholders, or an Authorized Person of Fund provided such instructions
are in proper order as set forth elsewhere in this Agreement and are
consistent with the data in Fund's records on the Systems;
E. The deposit daily in Fund's appropriate special bank account of all
checks and payments received by DST from NSCC, broker-dealers or
shareholders for investment in shares of open-end funds;
F. Notwithstanding anything herein to the contrary, with respect to "as of"
adjustments, DST will not assume one hundred percent (100%)
responsibility for losses resulting from "as of's" due to clerical
errors or misinterpretations of shareholder instructions, but DST will
discuss with Fund DST's accepting liability for an "as of" on a
case-by-case basis and may accept financial responsibility for a
particular situation resulting in a financial loss to Fund where DST and
Fund mutually agree that is appropriate and such loss is "material",
that is, it results in a pricing error on a given day which is (i)
greater than a negligible amount per shareholder, (ii) equals or exceeds
one ($.01) full cent per share times the number of shares outstanding
with respect to whether recompense of Fund is required or (iii) equals
or exceeds the product of one-half of one percent (1/2%) times Fund's
Net Asset Value per share times the number of shares outstanding with
respect to whether recompense at the shareholder level is required (or
such other amounts as may be adopted by applicable accounting or
regulatory authorities from time to time);
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G. Notwithstanding anything in this Agreement to the contrary, DST shall
perform the services set forth in Section 4.D. of, and elsewhere in,
this Agreement, including but not limited to the requiring of proper
forms of instructions, signatures and signature guarantees and any
necessary documents supporting the opening of shareholder accounts
(where required), transfers, redemptions and other shareholder account
transactions, in conformance with DST's present procedures as set forth
in its Legal Manual, Third Party Check Procedures, Checkwriting Draft
Procedures, and Signature Guarantee Procedures with such changes or
deviations therefrom as may be from time to time required or approved by
Fund, its investment adviser or principal underwriter, or their or DST's
counsel (the "Procedures") and the rejection of orders or instructions
not in good order in accordance with the applicable prospectus or the
Procedures;
H. The maintenance of customary records in connection with its agency, and
particularly those records required to be maintained pursuant to
subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under the
Investment Company Act of 1940, if any; and
I. The maintenance of a current, duplicate set of Fund's essential records
as of the close of business on the prior business day at a secure
separate location, in a form available and usable forthwith in the event
of any breakdown or disaster disrupting its main operation.
8. INDEMNIFICATION.
A. DST shall at all times use reasonable care, due diligence and act in
good faith in performing its duties under this Agreement. DST shall
provide its services as transfer agent in accordance with Section 17A of
the Exchange Act, and the rules and regulations thereunder. In the
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absence of bad faith, willful misconduct, knowing violations of
applicable law pertaining to the manner in which transfer agency
services are to be performed by DST (excluding any violations arising
directly or indirectly out of the actions of DST-unaffiliated third
parties), reckless disregard of the performance of its duties, or
negligence on its part, DST shall not be liable for any action taken,
suffered, or omitted by it or for any error of judgment made by it in
the performance of its duties under this Agreement. For those activities
or actions delineated in the Procedures, DST shall be presumed to have
used reasonable care, due diligence and acted in good faith if it has
acted in accordance with the Procedures, copies of which have been
provided to Fund and reviewed and approved by Fund counsel, as amended
from time to time with approval of counsel, or for any deviation
therefrom approved by an Authorized Person, Fund or Fund's or DST's
counsel.
B. DST shall not be responsible for, and Fund shall indemnify and hold DST
harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability which may be asserted
against DST or for which DST may be held to be liable, arising out of or
attributable to:
(1) All actions of DST required to be taken by DST pursuant to this
Agreement, provided that DST has acted in good faith and with due
diligence and reasonable care;
(2) Fund's refusal or failure to comply with the terms of this
Agreement, Fund's negligence or willful misconduct, or the breach of
any representation or warranty of Fund hereunder;
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(3) The good faith reliance on or the carrying out of any written or
recorded oral instructions or requests of persons designated by Fund
in writing from time to time as authorized to give instructions on
its behalf or of representatives of an Authorized Person or DST's
good faith reliance on or use of information, data, records and
documents received from, or which have been prepared and/or
maintained by or on behalf of, an Authorized Person;
(4) Defaults by dealers or shareowners with respect to payment for share
orders previously entered;
(5) The offer or sale of Fund's shares in violation of any requirement
under federal securities laws or regulations or the securities laws
or regulations of any state or in violation of any stop order or
other determination or ruling by any federal agency or state with
respect to the offer or sale of such shares in such state (unless
such violation results from DST's failure to comply with written
instructions of Fund or of any officer of Fund that no offers or
sales be input into Fund's securityholder records in or to residents
of such state);
(6) Fund's or its agents' and Authorized Persons' omissions, errors and
mistakes: (a) in the use of (i) the Systems, (ii) the data center,
computer and related equipment used to access the Systems (the "DST
Facilities"), and (iii) control procedures in the Systems, and (b)
in the verification of output and (c) in the remote input of data;
(7) Errors, inaccuracies and omissions in, or errors, inaccuracies or
omissions of DST arising out of or resulting from such errors,
inaccuracies and omissions in, Fund's records, shareholder records
and other records, delivered to DST hereunder by Fund or its prior
agent(s) (but not including errors, inaccuracies or omissions
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resulting from the negligence or willful misconduct of DST while DST
was acting as sub-agent on behalf of Investors Fiduciary Trust
Company, Fund's prior transfer agent);
(8) Actions or omissions to act by Fund or agents designated by Fund
with respect to duties assumed thereby as provided for in Section 21
hereof; and
(9) DST's performance of Exception Services except where DST acted or
omitted to act in bad faith, with reckless disregard of its
obligations or with gross negligence.
C. Except where DST is entitled to indemnification under Section 8.B.
hereof and with respect to "as ofs" set forth in Section 7.F., DST shall
indemnify and hold Fund harmless from and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability
arising out of DST's failure to comply with the terms of this Agreement
or arising out of or attributable to DST's negligence or willful
misconduct or breach of any representation or warranty of DST hereunder.
D. EXCEPT FOR VIOLATIONS OF SECTIONS 23, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO ANYONE,
INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR CONSEQUENTIAL
DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER ANY PROVISION OF THIS
AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY THEREOF.
E. Promptly after receipt by an indemnified person of notice of the
commencement of any action, such indemnified person will, if a claim in
respect thereto is to be made against an indemnifying party hereunder,
notify the indemnifying party in writing of the commencement thereof;
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but the failure so to notify the indemnifying party will not relieve an
indemnifying party from any liability that it may have to any
indemnified person for contribution or otherwise under the indemnity
agreement contained herein except to the extent it is prejudiced as a
proximate result of such failure to timely notify. In case any such
action is brought against any indemnified person and such indemnified
person seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, assume the defense thereof (in its own name or
in the name and on behalf of any indemnified party or both with counsel
reasonably satisfactory to such indemnified person); provided, however,
if the defendants in any such action include both the indemnified person
and an indemnifying party and the indemnified person shall have
reasonably concluded that there may be a conflict between the positions
of the indemnified person and an indemnifying party in conducting the
defense of any such action or that there may be legal defenses available
to it and/or other indemnified persons which are inconsistent with those
available to an indemnifying party, the indemnified person or
indemnified persons shall have the right to select one separate counsel
(in addition to counsel provided by the indemnifying party) to assume
such legal defense and to otherwise participate in the defense of such
action on behalf of such indemnified person or indemnified persons at
such indemnified party's sole expense. Upon receipt of notice from an
indemnifying party to such indemnified person of its election so to
assume the defense of such action and approval by the indemnified person
of counsel, which approval shall not be unreasonably withheld (and any
disapproval shall be accompanied by a written statement of the reasons
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therefor), the indemnifying party will not be liable to such indemnified
person hereunder for any legal or other expenses subsequently incurred
by such indemnified person in connection with the defense thereof. An
indemnifying party will not settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified persons are
actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional
release of each indemnified person from all liability arising out of
such claim, action, suit or proceeding. An indemnified party will not,
without the prior written consent of the indemnifying party, settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder. If it
does so, it waives its right to indemnification therefor.
9. CERTAIN COVENANTS OF DST AND FUND.
A. All requisite steps will be taken by Fund from time to time when and as
necessary to register Fund's shares for sale in all states in which
Fund's shares shall at the time be offered for sale and require
registration. If at any time Fund receives notice of any stop order or
other proceeding in any such state affecting such registration or the
sale of Fund's shares, or of any stop order or other proceeding under
the federal securities laws affecting the sale of Fund's shares, Fund
will give prompt notice thereof to DST.
B. DST hereby agrees to perform such transfer agency functions as are set
forth in section 4.D. above and establish and maintain facilities and
procedures reasonably acceptable to Fund for safekeeping of stock
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certificates, check forms, and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices, and to carry such insurance as it
considers adequate and reasonably available.
C. To the extent required by Section 31 of the Investment Company Act of
1940 as amended and Rules thereunder, DST agrees that all shareholder-
or Fund-related records maintained by DST relating to the services
performed by DST under this Agreement are the property of Fund and will
be preserved, and will, upon receipt of payment of all sums due to DST
in connection with DST's performance under this Agreement, be
surrendered promptly to Fund on request.
D. DST agrees to furnish Fund semiannual reports of its financial
condition, consisting of a balance sheet, earnings statement and any
other readily and publicly available financial information reasonably
requested by Fund. The annual financial statements will be certified by
DST's certified public accountants.
E. DST represents and agrees that it will use its reasonable efforts to
keep current on the trends of the investment company industry relating
to shareholder services and will use its reasonable efforts to continue
to modernize and improve.
F. DST will permit Fund and its authorized representatives to make periodic
inspections of its operations as such would involve Fund upon reasonable
prior notice and at reasonable times during business hours.
G. DST agrees to use its reasonable efforts to provide in Kansas City at
Fund's expense two (2) man weeks of training for Fund's personnel in
connection with use and operation of the Systems. All travel and
reimbursable expenses incurred by Fund's personnel in connection with
and during training at DST's Facility shall be borne by Fund. At Fund's
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option and expense, DST also agrees to use its best efforts to provide
an additional two (2) man weeks of training at Fund's facility for
Fund's personnel in connection with the Systems. Reasonable travel, per
diem and reimbursable expenses incurred by DST personnel in connection
with and during training at Fund's facility or in connection with the
conversion shall be borne by Fund.
H. Notwithstanding anything in this Agreement to the contrary, DST's only
warranty or covenant with respect to year 2000 compliance is that the
TA2000 System will be year 2000 compliant during the term set forth in
Section 22 of this Agreement. As used in this Agreement "year 2000
compliant" shall mean that the TA2000 System will perform in accordance
with the terms of this Agreement regardless of the century with respect
to which date data is encountered by the TA2000 System; provided, that
(i) all date data received by DST for use by the TA2000 System is
accurate and in formats specified by DST from time to time, (ii) all
date data generated by the TA2000 System is accepted by the recipient in
formats provided by DST from time to time, and (iii) DST shall not be
obligated to provide date data for interface functions such as screens,
reports or data transmission files in any format other than that
specified by DST from time to time. Notwithstanding the foregoing, DST
makes no representation or warranty as to the ability of any hardware,
firmware, software, products or services provided to DST by any other
party to manipulate or to process date data, or as to the functionality
of any DST software (including without limitation the TA2000 System) in
circumstances where data received from any third party system (including
without limitation that of Fund and its Authorized Persons, agents or
customers) is invalid, incorrect or otherwise corrupt.
10. RECAPITALIZATION OR READJUSTMENT.
In case of any recapitalization, readjustment or other change in the
capital structure of Fund requiring a change in the form of stock
certificates, DST will, upon agreement with Fund as to the charges to
apply thereto, issue or register certificates in the new form in
exchange for, or in transfer of, the outstanding certificates in the old
form, upon receiving:
A. Written instructions from an officer of Fund;
B. Certified copy of the amendment to the Articles of Incorporation or
other document effecting the change;
C. Certified copy of the order or consent of each governmental or
regulatory authority required by law to the issuance of the stock in the
new form, and an opinion of counsel that the order or consent of no
other government or regulatory authority is required;
D. Specimens of the new certificates in the form approved by the Board of
Directors or Trustees of Fund, with a certificate of the Secretary of
Fund as to such approval;
E. Opinion of counsel for Fund stating:
(1) The status of the shares of stock of Fund in the new form under the
Securities Act of 1933, as amended and any other applicable federal
or state statute; and
(2) That the issued shares in the new form are, and all unissued shares
will be, when issued, validly issued, fully paid and nonassessable.
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11. STOCK CERTIFICATES.
Fund will furnish DST with a sufficient supply of blank stock
certificates and from time to time will renew such supply upon the
request of DST. Such certificates will be signed manually or by
facsimile signatures of the officers of Fund authorized by law and by
bylaws to sign stock certificates and, if required, will bear the
corporate seal or facsimile thereof.
12. DEATH, RESIGNATION OR REMOVAL OF SIGNING OFFICER.
Fund will file promptly with DST written notice of any change in the
officers authorized to sign stock certificates, written instructions or
requests, together with two certificates of the Secretary or Clerk
bearing the specimen signature of each newly authorized officer. In case
any officer of Fund who has signed manually or whose facsimile signature
has been affixed to blank stock certificates dies, resigns, or is
removed prior to the issuance of such certificates, DST may issue or
register such stock certificates as the stock certificates of Fund
notwithstanding such death, resignation, or removal, until specifically
directed to the contrary by Fund in writing. In the absence of such
direction, Fund will file promptly with DST such approval, adoption, or
ratification as may be required by law.
13. FUTURE AMENDMENTS OF CHARTER AND BYLAWS.
Fund will promptly file with DST copies of all material amendments to
its Articles of Incorporation or Declaration of Trust, as applicable, or
bylaws made after the date of this Agreement.
14. INSTRUCTIONS, OPINION OF COUNSEL AND SIGNATURES.
At any time DST may apply to any person authorized by Fund, including
without limitation the duly authorized representative of any Authorized
Person and any Authorized Personnel set forth on Exhibit D to this
Agreement, to give instructions to DST, and may with the approval of a
Fund officer consult with legal counsel for Fund or its own legal
counsel at the expense of Fund, with respect to any matter arising in
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connection with the agency and it will not be liable for any action
taken or omitted by it in good faith in reliance upon such instructions
or upon the opinion of such counsel. DST will be protected in acting
upon any paper or document reasonably believed by it to be genuine and
to have been signed by the proper person or persons and will not be held
to have notice of any change of authority of any person, until receipt
of written notice thereof from Fund. It will also be protected in
recognizing stock certificates which it reasonably believes to bear the
proper manual or facsimile signatures of the officers of Fund, and the
proper countersignature of any former Transfer Agent or Registrar, or of
a present or former co-Transfer Agent or co-Registrar.
15. FORCE MAJEURE AND DISASTER RECOVERY PLANS.
A. DST SHALL NOT BE RESPONSIBLE OR LIABLE FOR ITS FAILURE OR DELAY IN
PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT ARISING OUT OF OR
CAUSED, DIRECTLY OR INDIRECTLY, BY CIRCUMSTANCES BEYOND ITS REASONABLE
CONTROL, INCLUDING, WITHOUT LIMITATION: ANY INTERRUPTION, LOSS OR
MALFUNCTION OR ANY UTILITY, TRANSPORTATION, COMPUTER (HARDWARE OR
SOFTWARE) OR COMMUNICATION SERVICE; INABILITY TO OBTAIN LABOR, MATERIAL,
EQUIPMENT OR TRANSPORTATION, OR A DELAY IN MAILS; GOVERNMENTAL OR
EXCHANGE ACTION, STATUTE, ORDINANCE, RULINGS, REGULATIONS OR DIRECTION;
WAR, STRIKE, RIOT, EMERGENCY, CIVIL DISTURBANCE, TERRORISM, VANDALISM,
EXPLOSIONS, LABOR DISPUTES, FREEZES, FLOODS, FIRES, TORNADOS, ACTS OF
GOD OR PUBLIC ENEMY, REVOLUTIONS, OR INSURRECTION; OR ANY OTHER CAUSE,
CONTINGENCY, CIRCUMSTANCE OR DELAY NOT SUBJECT TO DST'S CONTROL WHICH
PREVENTS OR HINDERS DST'S PERFORMANCE HEREUNDER.
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B. DST currently maintains an agreement with a third party whereby DST is
to be permitted to use on a "shared use" basis a "hot site" (the
"Recovery Facility") maintained by such party in event of a disaster
rendering the DST Facilities inoperable. DST has developed and is
continually revising a business contingency plan (the "Business
Contingency Plan") detailing which, how, when, and by whom data
maintained by DST at the DST Facilities will be installed and operated
at the Recovery Facility. Provided Fund is paying its pro rata portion
of the charge therefor, DST would, in event of a disaster rendering the
DST Facilities inoperable, use reasonable efforts to convert the Systems
containing the designated Fund data to the computers at the Recovery
Facility in accordance with the then current Business Contingency Plan.
C. DST also currently maintains, separate from the area in which the
operations which provide the services to Fund hereunder are located, a
Crisis Management Center consisting of phones, computers and the other
equipment necessary to operate a full service transfer agency business
in the event one of its operations areas is rendered inoperable. The
transfer of operations to other operating areas or to the Crisis
Management Center is also covered in DST's Business Contingency Plan.
16. CERTIFICATION OF DOCUMENTS.
The required copy of the Articles of Incorporation or Declaration of
Trust of Fund and copies of all amendments thereto will be certified by
the Secretary of State (or other appropriate official) of the State of
Incorporation, and if such Articles of Incorporation or Declaration of
Trust and amendments are required by law to be also filed with a county,
city or other officer of an official body, a certificate of such filing
will appear on the certified copy submitted to DST. A copy of the order
or consent of each governmental or regulatory authority required by law
to the issuance of the stock will be certified by the Secretary or Clerk
of such governmental or regulatory authority, under proper seal of such
authority. The copy of the Bylaws and copies of all amendments thereto,
and copies of resolutions of the Board of Directors or Trustees of Fund,
as applicable, will be certified by the Secretary or Clerk or an
Assistant Secretary or Clerk of Fund under Fund's seal.
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17. RECORDS.
DST will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained
pursuant to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under
the Investment Company Act of 1940, if any.
18. DISPOSITION OF BOOKS, RECORDS AND CANCELED CERTIFICATES.
DST may send periodically to Fund, or to where designated by the
Secretary or an Assistant Secretary of Fund, all books, documents, and
records no longer deemed needed for current purposes and all stock
certificates which have been canceled in transfer or in exchange, upon
the understanding that such books, documents, records, and stock
certificates will be maintained by Fund under and in accordance with the
requirements of Section 17Ad-7 adopted under the Securities Exchange Act
of 1934. Such materials will not be destroyed by Fund without the
consent of DST (which consent will not be unreasonably withheld), but
will be safely stored for possible future reference and maintained,
preserved and made available to DST and the U.S. Securities and Exchange
Commission in accordance with the requirement of Sections 17Ad-7 and 17
C.F.R. ss.240.17Ad-7.
19. PROVISIONS RELATING TO DST AS TRANSFER AGENT.
A. DST will make original issues of stock certificates upon written request
of an officer of Fund, and upon mutual agreement as to the charges to
apply thereto and being furnished with a certified copy of a resolution
of the Board of Directors or Trustees authorizing such original issue,
an opinion of counsel as outlined in Section 1.G. of this Agreement, any
documents required by Sections 5. or 10. of this Agreement, and
necessary funds for the payment of any original issue tax.
B. Before making any original issue of certificates, Fund will furnish DST
with sufficient funds to pay all required taxes on the original issue of
the stock, if any. Fund will furnish DST such evidence as may be
24
required by DST to show the actual value of the stock. If no taxes are
payable, DST will be furnished with an opinion of outside counsel to
that effect.
C. Shares of stock will be transferred and new certificates issued in
transfer, or, except in the case of closed-end funds, shares of stock
will be accepted for redemption and funds remitted therefor, or book
entry transfer will be effected, upon surrender of the old certificates
in form or receipt by DST of instructions deemed by DST properly
endorsed for transfer or, except in the case of closed-end funds,
redemption accompanied by such documents as DST may deem necessary to
evidence the authority of the person making the transfer or redemption.
DST reserves the right to refuse to transfer or redeem shares until it
is satisfied that the endorsement or signature on the certificate or any
other document is valid and genuine, and for that purpose, unless Fund
has instructed DST not to require a signature guarantee, DST may require
a guaranty of signature in accordance with the Procedures. DST shall
have the right to refuse to transfer or redeem shares until it is
satisfied that the requested transfer or redemption is legally
authorized, and it will incur no liability for the refusal in good faith
to make transfers or redemptions which, in its judgment, are improper or
unauthorized. DST may, in effecting transfers or redemptions, rely upon
Simplification Acts, Uniform Commercial Code, or other statutes which
protect it and Fund in not requiring complete fiduciary documentation.
In cases in which DST is not directed or otherwise required to maintain
the consolidated records of shareholder's accounts, DST will not be
liable for any loss which may arise by reason of not having such
records.
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D. When mail is used for delivery of stock certificates, DST will forward
stock certificates in "nonnegotiable" form by first class or registered
mail and stock certificates in "negotiable" form by registered mail, all
such mail deliveries to be covered while in transit to the addressee by
insurance arranged for by DST.
E. DST will issue and mail subscription warrants, certificates representing
stock dividends, exchanges or split ups, or act as Conversion Agent upon
receiving written instructions from any officer of Fund and such other
documents as DST deems necessary upon agreement between DST and Fund as
to the charges to apply thereto.
F. DST will issue, transfer, and split up certificates and will issue
certificates of stock representing full shares upon surrender of scrip
certificates aggregating one full share or more when presented to DST
for that purpose upon receiving written instructions from an officer of
Fund and such other documents as DST may deem necessary.
G. DST may issue new certificates in place of certificates represented to
have been lost, destroyed, stolen or otherwise wrongfully taken upon
receiving instructions from Fund and indemnity satisfactory to DST and
Fund, and may issue new certificates in exchange for, and upon surrender
of, mutilated certificates. Such instructions from Fund will be in such
form as will be approved by the Board of Directors or Trustees of Fund
and will be in accordance with the provisions of law and the bylaws of
Fund governing such matter.
H. DST will supply a shareholder's list to Fund for its annual meeting upon
receiving a request from an officer of Fund. It will also supply lists
26
at such other times as may be requested by an officer of Fund, subject
to payment of applicable charges therefor.
I. Upon receipt of written instructions of an officer of Fund, DST will
address and mail notices to shareholders.
J. In case of any request or demand for the inspection of the stock books
of Fund or any other books in the possession of DST, DST will endeavor
to notify Fund and to secure instructions as to permitting or refusing
such inspection. DST reserves the right, however, to exhibit the stock
books or other books to any person in case it is advised by its counsel
that it may be held responsible for the failure to exhibit the stock
books or other books to such person.
20. PROVISIONS RELATING TO DIVIDEND DISBURSING AGENCY.
A. DST will, at the expense of Fund, provide a special form of check
containing the imprint of any device or other matter desired by Fund.
Said checks must, however, be of a form and size convenient for use by
DST.
B. If Fund desires to include additional printed matter, financial
statements, ETC., with the dividend checks, the same will be furnished
to DST within a reasonable time prior to the date of mailing of the
dividend checks, at the expense of Fund.
C. If Fund desires its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to DST, but
the size and form of said envelopes will be subject to the approval of
DST. If stamped envelopes are used, they must be furnished by Fund; or
if postage stamps are to be affixed to the envelopes, the stamps or the
cash necessary for such stamps must be furnished by Fund in advance of
such mailing.
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D. DST is hereby authorized to open and to maintain at a Bank acceptable to
Fund one or more non-interest bearing deposit accounts as Agent for
Fund, into which the funds for payment of dividends, distributions,
redemptions or other disbursements provided for hereunder will be
deposited, and against which checks will be drawn.
E. DST is authorized and directed to stop payment of checks theretofore
issued hereunder, but not presented for payment, when the payees thereof
allege either that they have not received the checks or that such checks
have been mislaid, lost, stolen, destroyed or through no fault of
theirs, are otherwise beyond their control, and cannot be produced by
them for presentation and collection, and, to issue and deliver
duplicate checks in replacement thereof.
21. ASSUMPTION OF DUTIES BY FUND OR AGENTS DESIGNATED BY FUND.
A. Fund or its designated agents other than DST may assume certain duties
and responsibilities of DST or those services of Transfer Agent and
Dividend Disbursement Agent as those terms are referred to in Section
4.D. of this Agreement including but not limited to answering and
responding to telephone inquiries from shareholders and brokers,
accepting shareholder and broker instructions (either or both oral and
written) and transmitting orders based on such instructions to DST,
preparing and mailing confirmations, obtaining certified TIN numbers,
classifying the status of shareholders and shareholder accounts under
applicable tax law, establishing shareholder accounts on the Systems and
assigning social codes and Taxpayer Identification Number codes thereof,
and disbursing monies of Fund, said assumption to be embodied in writing
to be signed by both parties.
B. To the extent Fund or its agent or affiliate assumes such duties and
responsibilities, DST shall be relieved from all responsibility and
liability therefor and is hereby indemnified and held harmless against
any liability therefrom and in the same manner and degree as provided
for in Section 8 hereof.
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C. Initially Fund shall be responsible for the following: (i) answer and
respond to phone calls from shareholders and broker-dealers, and (ii)
scan items into the AWD(TM) System as such calls or items are received
by Fund, and (iii) enter and confirm wire order trades.
22. TERMINATION OF AGREEMENT.
A. This Agreement shall be in effect from the date set forth on the first
page (the "Effective Date") through September 30, 1999 and thereafter
may be terminated by either party upon receipt of six (6) months written
notice from the other party, provided, however, that the effective date
of any termination shall not occur during the period from December 15
through March 30 of any year to avoid adversely impacting year end. Upon
the Effective Date, the prior agency agreement between Fund and
Investor's Fiduciary Trust Company ("IFTC") which was assigned by IFTC
to DST, shall terminate and be of no further force and effect except as
otherwise provided therein.
B. Each party, in addition to any other rights and remedies, shall have the
right to terminate this Agreement forthwith upon the occurrence at any
time of any of the following events with respect to the other party:
(1) Any interruption or cessation of operations by the other party or
its assigns which materially interferes with the business operation
of the first party;
(2) The bankruptcy of the other party or its assigns or the appointment
of a receiver for the other party or its assigns;
29
(3) Failure by the other party or its assigns to perform its duties in
accordance with the Agreement, which failure materially adversely
affects the business operations of the first party and which failure
continues for thirty (30) days after receipt of written notice from
the first party; and
(4) The acquisition of a controlling interest in DST Systems, Inc. or
its assigns, by any broker, dealer, investment adviser or investment
company except as may presently exist.
C. In the event of any termination, Fund will promptly pay DST all amounts
due to DST hereunder. In addition, if this Agreement is terminated by
Fund for any reason other than those set forth in Section 22.B. hereof,
then Fund shall pay to DST on the last business day of each of the next
three (3) whole or partial calendar months (commencing with the last day
of the month in which termination actually occurs if termination does
not occur on the last business day of the month, and with the last
business day of the immediately following month if termination actually
occurs on the last business day of a month) an amount equal to the
average monthly fees, exclusive of the out-of-pocket expenses, paid by
or on behalf of each terminating party under the affected Agreement
during the six (6) calendar months preceding the month during which the
termination notice was received by DST.
D. If the termination date set forth in the original termination notice is
extended by any terminating party (which extension shall require the
agreement of DST), then the fees and charges payable by the terminating
party under this Agreement shall increase by twenty percent (20%) during
the period commencing with the original termination date set forth in
the initial termination notice and concluding with the day upon which
termination actually occurs. These provisions are in addition to any
other contractual provision or compensation agreements that may be in
existence at the time of an actual transfer.
30
E. DST shall, upon termination of this Agreement and receipt of payment of
all outstanding bills and invoices, deliver to the successor so
specified or appointed, or to Fund, at DST's office, all records then
held by DST hereunder, all funds and other properties of Fund deposited
with or held by DST hereunder. In the event no written order designating
a successor (which may be Fund) shall have been delivered to DST on or
before the date when such termination shall become effective, then DST
shall deliver the records, funds and properties of Fund to a bank or
trust company at the selection of DST or if a satisfactory successor
cannot be obtained, DST may deliver the assets to Fund, at DST's offices
or as otherwise agreed to between the parties. Thereafter Fund or such
bank or trust company shall be the successor under this Agreement and
shall be entitled to reasonable compensation for its services.
Notwithstanding the foregoing requirement as to delivery upon
termination of this Agreement, DST may make any other delivery of the
funds and property of Fund which shall be permitted by the Investment
Company Act of 1940 and Fund's Articles of Incorporation, Declaration of
Trust, and/or Bylaws then in effect. Except as otherwise provided
herein, neither this Agreement nor any portion thereof may be assigned
by DST without the consent of Fund.
F. In the event of termination, DST shall provide reasonable assistance to
Fund and its designated successor transfer agent and other information
relating to its service provided hereunder (subject to the recompense of
DST for such assistance at its standard rates and fees for personnel
then in effect at that time); provided, however, as used herein
31
"reasonable assistance" and "other information" shall not include
assisting any new service or system provider to modify, alter, enhance,
or improve its system or to improve, enhance, or alter its current, or
to provide any new, functionality or to require DST to disclose any DST
Protected Information, as defined in Section 23 of this Agreement, or
any information which is otherwise confidential to DST. DST's assistance
shall be billed at its then current rates. DST's present rates, which
are subject to annual increase as DST's labor costs for such personnel
increase, are set forth in Exhibit B.
G. Nothing in this Agreement is intended to, nor does it, compel DST to
disclose non-public information concerning its operations or operating
systems or to provide programming assistance or information which might
tend to improve, enhance, or add functionality to anyone else's
operating systems.
23. CONFIDENTIALITY.
A. DST agrees that, except as provided in the last sentence of Section 19.J
hereof, or as otherwise required by law, DST will keep confidential all
records of and information in its possession relating to Fund or its
shareholders or shareholder accounts and will not disclose the same to
any person except at the request or with the consent of Fund.
B. Fund agrees to keep confidential all provisions, terms and conditions of
this Agreement, all financial statements and other financial records
(other than statements and records relating solely to Fund's business
dealings with DST) and all manuals, systems and other technical
information and data, not publicly disclosed, relating to DST's
operations and programs furnished to it by DST pursuant to this
Agreement and will not disclose the same to any person except at the
request or with the consent of DST.
32
C. Fund acknowledges that DST has proprietary rights in and to the
computerized data processing recordkeeping system used by DST to perform
services hereunder including but not limited to the maintenance of
shareholder accounts and records, processing of related information and
generation of output, the Systems, including without limitation any
changes or modifications of the Systems and any other DST programs, data
bases, supporting documentation, or procedures (collectively "DST
Protected Information") which Fund's access to the Systems or software
or DST Facilities may permit Fund or its employees or agents to become
aware of or to access and that the DST Protected Information constitutes
confidential material and trade secrets of DST. Fund agrees to maintain
the confidentiality of the DST Protected Information.
D. Fund acknowledges that any unauthorized use, misuse, disclosure or
taking of DST Protected Information which is confidential as provided by
law, or which is a trade secret, residing or existing internal or
external to a computer, computer system, or computer network, or the
knowing and unauthorized accessing or causing to be accessed of any
computer, computer system, or computer network, may be subject to civil
liabilities and criminal penalties under applicable state law. Fund will
advise all of its employees and agents who have access to any DST
Protected Information or to any computer equipment capable of accessing
DST hardware or software of the foregoing.
E. Fund acknowledges that disclosure of the DST Confidential Information
may give rise to an irreparable injury to DST inadequately compensable
in damages. Accordingly, DST may seek (without the posting of any bond
33
or other security) injunctive relief against the breach of the foregoing
undertaking of confidentiality and nondisclosure, in addition to any
other legal remedies which may be available, and Fund consents to the
obtaining of such injunctive relief. All of the undertakings and
obligations relating to confidentiality and nondisclosure, whether
contained in this Section or elsewhere in this Agreement shall survive
the termination or expiration of this Agreement for a period of ten (10)
years.
24. CHANGES AND MODIFICATIONS.
A. During the term of this Agreement DST will use on behalf of Fund without
additional cost all modifications, enhancements, or changes which DST
may make to the Systems in the normal course of its business and which
are applicable to functions and features offered by Fund, unless
substantially all DST clients are charged separately for such
modifications, enhancements or changes, including, without limitation,
substantial system revisions or modifications necessitated by changes in
existing laws, rules or regulations. Fund agrees to pay DST promptly for
modifications and improvements which are charged for separately at the
rate provided for in DST's standard pricing schedule which shall be
identical for substantially all clients, if a standard pricing schedule
shall exist. If there is no standard pricing schedule, the parties shall
mutually agree upon the rates to be charged.
B. DST shall have the right, at any time and from time to time, to alter
and modify any systems, programs, procedures or facilities used or
employed in performing its duties and obligations hereunder; provided
that Fund will be notified as promptly as possible prior to
implementation of such alterations and modifications and that no such
34
alteration or modification or deletion shall materially adversely change
or affect the operations and procedures of Fund in using or employing
the Systems or DST Facilities hereunder or the reports to be generated
by such system and facilities hereunder, unless Fund is given thirty
(30) days prior notice to allow Fund to change its procedures and DST
provides Fund with revised operating procedures and controls.
C. All enhancements, improvements, changes, modifications or new features
added to the Systems however developed or paid for shall be, and shall
remain, the confidential and exclusive property of, and proprietary to,
DST.
25. SUBCONTRACTORS.
Nothing herein shall impose any duty upon DST in connection with or make
DST liable for the actions or omissions to act of unaffiliated third
parties such as, by way of example and not limitation, the banks at
which the deposit accounts are maintained, The National Securities
Clearing Corporation, airborne services, the U.S. mails and
telecommunication companies, provided, if DST selected such company, DST
shall have exercised due care in selecting the same.
26. LIMITATIONS ON LIABILITY.
A. If Fund is comprised of more than one Portfolio, each Portfolio shall be
regarded for all purposes hereunder as a separate party apart from each
other Portfolio. Unless the context otherwise requires, with respect to
every transaction covered by this Agreement, every reference herein to
Fund shall be deemed to relate solely to the particular Portfolio to
which such transaction relates. Under no circumstances shall the rights,
obligations or remedies with respect to a particular Portfolio
constitute a right, obligation or remedy applicable to any other
35
Portfolio. The use of this single document to memorialize the separate
agreement of each Portfolio is understood to be for clerical convenience
only and shall not constitute any basis for joining the Portfolios for
any reason.
B. Notice is hereby given that a copy of Fund's Articles of Incorporation
or Trust Agreement (as applicable) and all amendments thereto is on file
with the Secretary of State of the state of its organization; that this
Agreement has been executed on behalf of Fund by the undersigned duly
authorized representative of Fund in his/her capacity as such and not
individually; and that the obligations of this Agreement shall only be
binding upon the assets and property of Fund and shall not be binding
upon any director, trustee, officer or shareholder of Fund individually.
27. NOTICES.
All notices, consents, requests, instructions, approvals and other
communications provided for herein shall be validly given, made or
served if in writing and delivered personally, sent by mail, registered
or certified, return receipt requested, postage prepaid, by telegram or
by facsimile transmission:
If to Fund:
The Pilgrim Group of Funds
Two Renaissance Square
00 Xxxxx Xxxxxxx Xxxxxx., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attn: Xxx Xxxxxxxx
And if to DST:
DST Systems, Inc.
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attn: Senior Vice President
36
With a copy of non-operational notices to:
DST Systems, Inc.
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Attn: Legal Department
or to such other address as DST or Fund may from time to time designate
in writing delivered as provided above.
28. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of Missouri and
shall be construed according to, and the rights and liabilities of the
parties hereto shall be governed by, the laws of the State of Missouri,
excluding that body of law applicable to choice of law.
B. All terms and provisions of this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
C. The representations and warranties, all indemnifications and any
limitations on liability set forth in this Agreement are intended to and
shall continue after and survive the expiration, termination or
cancellation of this Agreement until any statute of limitations
applicable to the matter at issues shall have expired.
D. No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed each
party hereto.
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E. The captions in this Agreement are included for convenience of reference
only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
F. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts held
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be
construed and enforced as if this Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
H. This Agreement may not be assigned any party hereto without prior
written consent of the other parties.
I. Neither the execution nor performance of this Agreement shall be deemed
to create a partnership or joint venture by and between Fund and DST. It
is understood and agreed that all services performed hereunder by DST
shall be as an independent contractor and not as an employee of Fund.
This Agreement is between DST and Fund and neither this Agreement nor
the performance of services under it shall create any rights in any
third parties. There are no third party beneficiaries hereto.
J. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by any party hereunder shall not affect
any rights or obligations of any other party hereunder.
38
K. The failure of either party to insist upon the performance of any terms
or conditions of this Agreement or to enforce any rights resulting from
any breach of any of the terms or conditions of this Agreement,
including the payment of damages, shall not be construed as a continuing
or permanent waiver of any such terms, conditions, rights or privileges,
but the same shall continue and remain in full force and effect as if no
such forbearance or waiver had occurred.
L. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement, draft or agreement or
proposal with respect to the subject matter hereof, whether oral or
written.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers, to be effective as of the
day and year first above written.
DST SYSTEMS, INC. PILGRIM MUTUAL FUNDS
Pilgrim International Core Growth
Pilgrim Worldwide Growth
Pilgrim International Small Cap Growth
Pilgrim Emerging Countries
Pilgrim Large Cap Growth
Pilgrim MidCap Growth
Pilgrim Small Cap Growth
Pilgrim Convertible
Pilgrim Balanced
Pilgrim Strategic Income
Pilgrim High Yield Fund II
Pilgrim Money Market
By: By:
---------------------------- --------------------------
Title: Title:
----------------------- -----------------------
39
EXHIBIT A
Open/ State of Taxpayer
Taxpayer/fund Name Type of Organization Closed Organization I.d. No.
------------------ -------------------- ------ ------------ --------
Pilgrim Mutual Funds corporation Delaware
Pilgrim International a series of Pilgrim
Core Growth Mutual Funds
Pilgrim Worldwide Growth a series of Pilgrim
Mutual Funds
Pilgrim International
Small Cap Growth a series of Pilgrim
Mutual Funds
Pilgrim Emerging Countries a series of Pilgrim
Mutual Funds
Pilgrim Large Cap Growth a series of Pilgrim
Mutual Funds
Pilgrim MidCap Growth a series of Pilgrim
Mutual Funds
Pilgrim Small Cap Growth a series of Pilgrim
Mutual Funds
Pilgrim Convertible a series of Pilgrim
Mutual Funds
Pilgrim Balanced a series of Pilgrim
Mutual Funds
Pilgrim Strategic Income a series of Pilgrim
Mutual Funds
Pilgrim High Yield Fund II a series of Pilgrim
Mutual Funds
Pilgrim Money Market a series of Pilgrim
Mutual Funds
40
EXHIBIT B
[intentionally left blank]
41
EXHIBIT C
REIMBURSABLE EXPENSES
Forms
Postage (to be paid in advance if so requested)
Mailing Services
Computer Hardware and Software - specific to Fund or installed at
remote site at Fund's direction
Telecommunications Equipment and Lines/Long Distance Charges
Magnetic Tapes, Reels or Cartridges
Magnetic Tape Handling Charges
Microfiche/Microfilm
Freight Charges
Printing Bank Wire and ACH Charges
Proxy Processing - per proxy mailed not including postage
Includes: Proxy Card
Printing
Outgoing Envelope
Return Envelope
Tabulation and Certification
T.I.N. Certification (W-8 & W-9)
(Postage associated with the return
envelope is included)
N.S.C.C. Communications Charge See Optional Services
(Fund/Serv and Networking) and Exhibit B.2
Off-site Record Storage
Disaster Backup Fee (per account) See Optional Services
Transmission of Statement Data for Currently $.035/per
Remote Processing record
Travel, Per Diem and other Billables
Incurred by DST personnel traveling
to, at and from Fund at the request
of Fund
42
EXHIBIT D
AUTHORIZED PERSONNEL
Pursuant to Section 8.A. of the Agency Agreement between Fund and DST (the
"Agreement"), Fund authorizes the following Fund personnel to provide
instructions to DST, and receive inquiries from DST in connection with the
Agreement:
Name Title
---- -----
--------------------------------- --------------------------------
--------------------------------- --------------------------------
--------------------------------- --------------------------------
--------------------------------- --------------------------------
--------------------------------- --------------------------------
This Exhibit may be revised by Fund by providing DST with a substitute Exhibit
B. Any such substitute Exhibit B shall become effective twenty-four (24) hours
after DST's receipt of the document and shall be incorporated into the
Agreement.
ACKNOWLEDGMENT OF RECEIPT:
PILGRIM MUTUAL FUNDS
Pilgrim International Core Growth
Pilgrim Worldwide Growth
Pilgrim International Small Cap Growth
Pilgrim Emerging Countries
Pilgrim Large Cap Growth
Pilgrim MidCap Growth
Pilgrim Small Cap Growth
Pilgrim Convertible
Pilgrim Balanced
Pilgrim Strategic Income
Pilgrim High Yield Fund II
Pilgrim Money Market
DST SYSTEMS, INC.
By: By:
---------------------------- --------------------------
Title: Title:
------------------------- -----------------------
Date: Date:
------------------------- -----------------------
43
